Correlation Between Secom Co and Shiseido

Can any of the company-specific risk be diversified away by investing in both Secom Co and Shiseido at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Secom Co and Shiseido into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Secom Co Ltd and Shiseido Company, you can compare the effects of market volatilities on Secom Co and Shiseido and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Secom Co with a short position of Shiseido. Check out your portfolio center. Please also check ongoing floating volatility patterns of Secom Co and Shiseido.

Diversification Opportunities for Secom Co and Shiseido

0.66

Correlation Coefficient

Secom Co  Shiseido

Poor diversification

The 3 months correlation between Secom and Shiseido is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Secom Co Ltd and Shiseido Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shiseido and Secom Co is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Secom Co Ltd are associated (or correlated) with Shiseido. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shiseido has no effect on the direction of Secom Co i.e., Secom Co and Shiseido go up and down completely randomly.

Pair Corralation between Secom Co and Shiseido

Assuming the 90 days horizon Secom Co Ltd is expected to generate 0.74 times more return on investment than Shiseido. However, Secom Co Ltd is 1.35 times less risky than Shiseido. It trades about -0.07 of its potential returns per unit of risk. Shiseido Company is currently generating about -0.38 per unit of risk. If you would invest  884.00  in Secom Co Ltd on September 5, 2024 and sell it today you would lose (20.00) from holding Secom Co Ltd or give up 2.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Secom Co Ltd  vs.  Shiseido Company

Secom Co

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Secom Co Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Shiseido

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shiseido Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Secom Co and Shiseido

The main advantage of trading using opposite Secom Co and Shiseido positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Secom Co position performs unexpectedly, Shiseido can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Shiseido will offset losses from the drop in Shiseido's long position.

The idea behind Secom Co Ltd and Shiseido Company pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.